1. OHT 9.1 © Marketing Insights Limited 2004 Chapter 9 Customer Relationship Management

2. OHT 9.2 © Marketing Insights Limited 2004 Learning objectives Outline different methods of acquiring customers via electronic media; Evaluate different buyer behaviour amongst online customers; Describe techniques for retaining customers and cross- and up-selling using new media.

3. OHT 9.3 © Marketing Insights Limited 2004 Issues for managers What is the balance between online and offline investment for customer acquisition? What technologies can be used to build and maintain the online relationship? How do we deliver superior service quality to build and maintain relationships?

4. OHT 9.4 © Marketing Insights Limited 2004 Forecasts Gartner (www.gartner.com)www.gartner.com –$25 billion spent on CRM 2002 –$50 billion by 2005 –Yet 70% of CRM projects fail

5. OHT 9.5 © Marketing Insights Limited 2004 What is CRM? You have a job interview for Centrica (AA, British Gas, Goldfish) working in the CRM team www.theaa.co.uk, www.house.co.uk www.theaa.co.ukwww.house.co.uk How would you explain the terms: –CRM –e-CRM Why does Centrica have a CRM function? –Why is CRM different? –What are benefits of this approach?

6. OHT 9.6 © Marketing Insights Limited 2004 E-CRM – a definition E-CRM is: Applying… Internet and other digital technology… (web, e-mail, wireless, iTV, databases) to… acquire and retain customers (through a multi-channel buying process and customer lifecycle) by… improving customer knowledge, targeting, service delivery and satisfaction

7. OHT 9.7 © Marketing Insights Limited 2004 Marketing applications of CRM A CRM system supports the following marketing applications: 1. Sales force automation (SFA). Sales representatives are supported in their account management through tools to arrange and record customer visits. 2. Customer service management. Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries. 3. Managing the sales process. This can be achieved through e- commerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA). 4. Campaign management. Managing ad, direct mail, e-mail and other campaigns. 5. Analysis. Through technologies such as data warehouses and approaches such as data mining, which are explained further later in the chapter, customers characteristics, their purchase behaviour and campaigns can be analysed in order to optimize the marketing mix.

8. OHT 9.8 © Marketing Insights Limited 2004 Three phases of customer relationship management Figure 9.1 Three phases of customer relationship management

9. OHT 9.9 © Marketing Insights Limited 2004 A summary of an effective process of online relationship building Figure 9.2 A summary of an effective process of online relationship building

10. OHT 9.10 © Marketing Insights Limited 2004 From old media to new media 1. From push to pull. 2. From monologue to dialogue. 3. From one-to-many to one-to-some and one-to-one. 4. From one-to-many to many-to-many communications 5. From ‘lean-back’ to ‘lean-forward’. 6. Form of tools changes. 7. Increase in communications intermediaries. 8. Integration remains important. See diagrams in chapter 8 also on media characteristics

11. OHT 9.11 © Marketing Insights Limited 2004 Offline and online communications techniques for e-commerce Figure 9.3 Offline and online communications techniques for e-commerce

12. OHT 9.12 © Marketing Insights Limited 2004 Evaluate the effectiveness of the tools with AIMRITE Audience: can the target audience be reached? Impact: can message get through the clutter? Message: is message communication effective? Response: is responding easy (direct/indirect)? Internal management: can the tools be managed readily by agency or internally? The End Result: What are the response rates, costs and returns?

13. OHT 9.13 © Marketing Insights Limited 2004 AIMRITE – Online advertising Positive featuresNegative features Audience Impact Message Response Information management End Results

14. OHT 9.14 © Marketing Insights Limited 2004 The relationship between banner ads and destination sites Figure 9.4 The relationship between online ads and destination sites

15. OHT 9.15 © Marketing Insights Limited 2004 Skyscraper to microsite example

16. OHT 9.16 © Marketing Insights Limited 2004 Standard landing page http://www.norwichunion.com/products/ insurance/travel/single_annual_travel.htm

17. OHT 9.17 © Marketing Insights Limited 2004 Online ads - effectiveness Instruct, not hope Evolve, not cycle Flash, not GIF (Rich media) Use large ad formats www.lemonad.com www.lemonad.com Brand the first frame Brand top of skyscrapers Ditch ‘Click here!’ High contrast Use < 15 ad elements Use large logos Include a human face www.avantmarketer.com But remember, the 6X rule from www.atlasdmt.com:www.atlasdmt.com CTRs vary 6 times more on placement than creative

18. OHT 9.18 © Marketing Insights Limited 2004 AIMRITE – Search engine marketing Positive featuresNegative features Audience Impact Message Response Information management End Results

19. OHT 9.19 © Marketing Insights Limited 2004 Search engine marketing Adwords select(PPC) Position: CPC and CTR Premium Sponsorships (Position:CPM)

20. OHT 9.20 © Marketing Insights Limited 2004 1 Search engine registration What is it? ‘Timely submission of domain names, especially campaign- specific names to key search engines’. The issues: 1. Representation. Are you registered on the main search engines? Do you check continuously? 2. Time to register. Plan ahead and make use of paid inclusion services to ensure that campaign-specific URLs can be found when your campaign goes live. 3. New search engines. Search engines change in popularity – are you listed with the latest ones?

21. OHT 9.21 © Marketing Insights Limited 2004 2 Search engine optimization (SEO) What is it? ‘Improving your competitive position in the search engine results listings’. The issues: 1. It’s not just meta-tags. Ignored by most search engines – keyword frequency in body copy, tags, headings and links are much more important. 2. Doorway pages. Creating special pages optimised for different product-related keywords and search engines is a key technique for high listings. 3. It’s a continuous process. Search engine algorithms, popularity and competitor activity all change, so to stay competitive, SEO demands continuous attention (Use an agency).

22. OHT 9.22 © Marketing Insights Limited 2004 Search engine indexing Figure 8.14 Stages involved in creating a search engine listing (Chaffey et al., Internet Marketing)

23. OHT 9.23 © Marketing Insights Limited 2004 3 Search engine advertising (PPC) What is it? ‘Keyword-based, paid for placements or sponsored links to increase your prominence (Position based on bid)’. The issues: 1. SEO is not enough. Increasingly, SEO alone does not give sufficient visibility in many search engines. Paid placements are necessary to ensure visibility. 2. Is your PPC effective? As with any campaign, there are more and less effective approaches. Case study shows that by rationalising PPC, sales per day were doubled, while the cost per click was halved. 3. It’s a continuous process. Competitor activity varies, so automated bid management tools need to be used to optimise the bids, with frequent reviews of strategy effectiveness (www.gotoast.com, www.bidbuddy.co.uk).www.gotoast.comwww.bidbuddy.co.uk

24. OHT 9.24 © Marketing Insights Limited 2004 Overture / Freeserve ad options Bid: £1.50 Bid: £1.32 Bid: £1.31

25. OHT 9.25 © Marketing Insights Limited 2004 AIMRITE – Affiliates and links Positive featuresNegative features Audience Impact Message Response Information management End Results

26. OHT 9.26 © Marketing Insights Limited 2004 Link building Affects ‘Page Rank’ or link popularity in Google – Type primary keywords into Google – Use “link:site name” or Optilink to find referrers – Beat them: in number AND reputation (referring text) A structured link-building programme will reap benefits both in terms of visitors and enhanced Google listings. Reciprocal links are free, but are mainly practical for intermediaries. Online PR is another form of link building. Is this neglected?

27. OHT 9.27 © Marketing Insights Limited 2004 Affiliates What are they? ‘A commission based arrangement where referring sites (publishers) receive a commission on sales by merchants’. ‘Affiliate networks’ such as Trade Doubler have over 400,000 companies across Europe. Used for financial services and travel as well as retailers. MFI derives 8% of its online revenue from affiliates Affiliates help expand reach through niche sites

28. OHT 9.28 © Marketing Insights Limited 2004 AIMRITE – E-mail marketing Positive featuresNegative features Audience Impact Message Response Information management End Results

29. OHT 9.29 © Marketing Insights Limited 2004 Why e-mail marketing? Higher response rates Shorter campaign creation Faster response Shorter overall cycle time Lower costs –More precise targeting –Multiple messages to convert –More detailed testing and measurement

30. OHT 9.30 © Marketing Insights Limited 2004 Example e-mail – rented list

31. OHT 9.31 © Marketing Insights Limited 2004 Example e-mail house list

32. OHT 9.32 © Marketing Insights Limited 2004 Example e-mail multi-message campaign Figure 8.17 Example of a campaign structure for an e-mail campaign. From Chaffey et al. Internet Marketing. Supplied by UK-based e-mail marketing specialists Harvest Digital (www.harvestdigital.com)

33. OHT 9.33 © Marketing Insights Limited 2004 Reasons why businesses do not buy supplies online Figure 9.5 Reasons why businesses do not buy supplies online Source: DTI (2002)

34. OHT 9.34 © Marketing Insights Limited 2004 The simple buying process Figure 9.6 The simple buying process

35. OHT 9.35 © Marketing Insights Limited 2004 Online behaviours Directed information seekers. Will be looking for product, market or leisure information such as details of their football club’s fixtures. This type of user tends to be experienced in using the web and they are proficient in using search engines and directories. Undirected information seekers. These are the users usually referred to as surfers, who like to browse and change sites by following hyperlinks. This group tends to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements. Directed buyers. These buyers are online to purchase specific products. For such users, brokers or cybermediaries who compare product features and prices will be important locations to visit. Bargain hunters. These users want to use the find offers available from sales promotions such as free samples or prizes. Entertainment seekers. Users looking to interact with the web for enjoyment through entering contests such as quizzes.

36. OHT 9.36 © Marketing Insights Limited 2004 Responses to question: ‘How did you find the product website you used to research a purchase?’ Figure 9.7 Responses to question: ‘How did you find the product website you used to research a purchase?’ Source: DoubleClick (2003b)

37. OHT 9.37 © Marketing Insights Limited 2004 RS Components web site (www.rswww.com)www.rswww.com Figure 9.8 RS Components web site (www.rswww.com)

38. OHT 9.38 © Marketing Insights Limited 2004 Schematic of the relationship between satisfaction and loyalty Figure 9.9 Schematic of the relationship between satisfaction and loyalty Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from ‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G., Sasser, W., and Schlesinger, E., in Harvard Business Review, March–April 1994. Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved.

39. OHT 9.39 © Marketing Insights Limited 2004 Personalisation on Silicon.com (www.silicon.com) for an IT manager audiencewww.silicon.com Figure 9.10 Personalization on Silicon.com (www.silicon.com) for an IT manager audience Used with permission from CNET Networks UK Ltd. © 2001, all rights reserved

40. OHT 9.40 © Marketing Insights Limited 2004 Permission marketing Interruption marketing –To promote we must compete with many marketing messages and cut into what the customer is currently doing. Permission marketing –Give customers the option to receive information if they feel it will be of value to them. www.permission.com Opt-in Opt-out Incentivise

41. OHT 9.41 © Marketing Insights Limited 2004 What exactly is permission marketing? Key features: – Opt-in – Based on initial incentive – Opt-out – Continue incentives through time to: Learn more about customer Tailor product offerings Sell more Seth Godin: www.permission.comwww.permission.com B2B Example: www.microstrategy.com

42. OHT 9.42 © Marketing Insights Limited 2004 Permission marketing vs SPAM Figure 9.11 Reactions to permission marketing vs SPAM Source: DTI (2000)

43. OHT 9.43 © Marketing Insights Limited 2004 IDIC Source: Chaffey et al. (2003)

44. OHT 9.44 © Marketing Insights Limited 2004 Cisco site feedback options (www.cisco.com)www.cisco.com Figure 9.12 Cisco site feedback options (www.cisco.com)

45. OHT 9.45 © Marketing Insights Limited 2004 Overview of the components of CRM technologies Figure 9.13 An overview of the components of CRM technologies